Since the government has spent such an inordinate amount of taxpayer money cleaning up after the Wall Street ne’er-do-wells and the giant mess they made, there is not a whole lot of money left over for other projects.

Once such legislative work was National Health Insurance. Surveys have shown that a significant majority of Americans support this. It was one of the key planks that President-elect Barack Obama ran on.

Well, no worries over the lack of funding for health care. I have figured out a simple way to insure that every man woman and child int he US is covered by health care insurance. I took a page from the cleverest of the financial engineers on Wall Street, and all it took was a little of that street magic and derivative-based hocus pocus.

It goes something like this:

1. Set up a large, well capitalized hedge fund. About $5B should do it.

2. The prospectus of the fund should note its purpose is to “Seek out profit opportunities via arbitraging inefficiencies in the markets and health care system of the United States.” Include standard “Socially Conscious” fund language in clauses such as Do well by doing good.

3. Launch the fund — and promptly max out your leverage. Today’s environment makes it difficult to go 50 to 1, but getting 10 or 20 to 1 should not be much problem.

4. Use the money to write Credit Default Swaps with a notational value of $3 trillion dollars. The premia on these CDS should be about 10-15% or so.

5. Rollover the cash premiums — about $350 billion dollars worth — into a national fund. Use it to buy health care insurance for all US citizens.

6. Declare that due to current credit conditions, your unfortunately must announce to your counter-parties that you will be defaulting on these CDS. Note that significant amounts of this paper are held by JP Morgan and Citi. Another trillion is held by China and Japan, with Sovereign Wealth Funds owning the rest.

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

By my reckoning, $350B would only purchase health care insurance for every person in the US only for a single year. You will have to repeat this on an annual basis. But, given the mental giants in our Congress, Treasury, and Federal Reserve, this should not be a problem.

“By my reckoning, $350B would only purchase health care insurance for every person in the US only for a single year. You will have to repeat this on an annual basis. But, given the mental giants in our Congress, Treasury, and Federal Reserve, this should not be a problem.”

Since we currently spend about $2 trillion a year on health care, I would consider that a real bargain.

Let’s not forget a gov’t backed program to buy up long-outstanding hospital accounts receivables at $0.20 on the dollar. The USG can then go after the sick, the weary, the poor by creating jobs to fill seats in massive call centers based out of Detroit.

To buttress this plan, the USG could buy up the debt on the hospitals’ balance sheets, package them, slice them and then sell them in the secondary market as “HBS.”

i just want to know if viagra is going to be included with the health care plan.

And I also want to know why–when house prices were going up, energy was skyrocketing, and the markets advanced to DOW 14k–we did not have inflation, and now when they are correcting, we have deflation?

My guesstimate was based on an estimated population of 300 million, times a bit over a grand per person per year for health care insurance — which is, upon reflection, more in line with a quarter’s coverage rather than a year’s coverage.

Yeah, you’re right, that was a bit too much of a bargain. I’ll amend my claim to having such a system be required to be repeated quarterly instead of annually.

But considering that about half the nation has no health care insurance whatsoever today, that’s probably only about half what would be required to cover everyone. But the theory would be, that by availing health care to everyone, there would be some cost-effective prevention and treatment, lowering the overall heath care expenditure. At least that’s what the health care industry would have us believe.

Still a pretty big gap between the cost of health insurance and the cost of health care. I suppose that’s where the co-pays come in.

Of course, the point in all this is that no way, no how can we expect to achieve any kind of national health care system until the health of the national economy is mended. Meanwhile, those being laid off by the millions had better either stay healthy or expect to heal from whatever ailments befall them on their own.

Deficit spending in the amounts necessary to provide national health care will only speed the demise of the nation. Restoring the national economy to health should be the first priority, and I see no signs yet that we are about this task, instead choosing repeated bloodlettings for our anemic patient, who is dying from a lack of systemic balance, our economic veins being clogged with debt, and Doc’s Ben and Hank merrily pumping more debt by the second into the national body. Amputation is called for, removing the gangrenous limbs.

In all seriousness, shouldn’t we (you know the people of the USA) demand some sort of tax on every transaction conducted on Wall Street (I don’t know 0.5%?) until the trillions we have laid out have been repaid? We are spending more here on bailouts that we need for all the other crap that is ailing our nation. Can anyonehonestly claim we could not have had universal health care, fully built out fiber optic broadband, free national wi-fi, repaired all our bridges, highways, and built a high speed national rail system with $8.5 trillion in cash?

I’m sorry, we need to find a way for them to pay us back or there need to be criminal proceedings. The other options are too ugly to bear.

It seems to me a tad too many people are now turning “bullish” for my liking. They’re vastly underestimating the severity of the situation, IMO. Hate to sound like a broken record but these geniuses were proven very wrong before and it will happen again next year to shred any semblance of credibility they once had……..

The proposal is not so far from what is actually going to happen. The key element of any national health care plan is to drastically understate the ultimate costs. Once the plan is in place, it’ll grow like a cancer. By then it’ll be impossible to eradicate.

We’ll eventually end up like France or Sweden, and we’ll have an average GDP growth rate of 1% per year.

@zot23 – don’t forget that competitiveness takes place on many levels. there’s no law that states global financial flow needs to be routed thru NYC. we need to come out of this downturn as a more efficient capital market where people get access to capital – we need to do this going forward without putting taxpayers at risk. rethinking Sarbox and other useless SEC reporting requirements might help.

Just print more money and give every American great healthcare, for cheap or free. “Healthcare is a right”, isn’t it?”

Yes. Why bother? As long as stupid foreigners and their sovereign wealth funds want our debt, it can be free. Eventually we will just inflate away the principal balances or default and it will all go away.

In this country we pay more per person for a dysfunctional healthcare system than France does for a system that actually works and covers everybody. National health insurance does not have to cost a dime. Just take all that money businesses and individuals waste on health care and you have more than enough money.

We could start by adding medicare taxes to investment income and inheritance income and increase those taxes by 1% (both for “employer” and “employee” part). That would easily fund universal catastrophic health insurance for everybody. If administered by medicare rather than private companies the administrative cost would be minimal. Responsible businesses that have been providing their employees with health insurance would save substantial amounts of money and have predictable future costs. Those who have not will no longer be able to pass the cost to everybody else.

taxes–feh–thats part of what got us into this problem in the first place. What part of free economy do you not understand? Pres Obama said (and I did hear this) that he wanted to refund payroll taxes to those earning under 50k a year–Most took that to mean income taxes. I took it to mean payroll taxes on sicial security and medicare.

Bottom line-unless something changes we are on the road to socialism. Th evoting majority in this country are looking for the freebie and will continue to vote that in. No idea how to pay for it but these entitlement programs sure sound good.

DL” We’ll eventually end up like France or Sweden, and we’ll have an average GDP growth rate of 1% per year.”

Would that be so bad? It would bring the US healthcare costs down from 16% of GDP to 10%. Improve the life expectancy and quality of life. Maybe there would even be a focus on preventative care on the whole population. GDP has been 3-4% in Sweden for the last 4 years. Public debt ~40%. Financial crisis? Take it over, leave nothing for the stockholders. Sell is 4 years later. Government recovers the money. Socialism can be tough. The US wouldn’t be able to end up like Sweden or France. There’s only socialism for the top 1% .

It’s certainly a novel approach. One of the things I find interesting about the anti universal healthcare, free market crowd is that they never explain how the fact that the US is paying twice as much as anyone else for a healthcare system that doesn’t cover about 17% of the population is actually a demonstration of the efficacy of free markets. Would you pay $60,000 for a $30,000 GM truck that didn’t have a back axle?

DL; except that it is free in all other industrialized countries and it still cost them a lot less than we pay. I am not suggesting that co-pays should not be a part of the system to encourage responsible use. If Kudlow would be against it it must be great – that man is so consistently wrong that it must be a miracle (it can’t be dumb luck).

How is President Bush’s Mission to Mars initiative coming along? According to his January 2004 speech, “no later than 2008″ we will be sending robotic missions to the moon to prepare for returning a man to the moon by 2020. I wonder where this ranks on Barack’s todo list

ottovbvs-why does everyone have to have health care? the 40m number cited is a joke. it includes a significant number of illegal immigrants and another lrg percentage of people who choose not to purchase health insurance (i.e. the young). not too mention another chunk who could qualify for medicare/aid but can’t be bothered to fill out the forms. why should we get rid our current system which is superior to any socialized system? on that pt, anyone who uses life expectancy as a metric for a measure of a country’s health care system hasn’t a clue about what they’re talking about. Much of what plays into life expectancy has nothing to health care. If you consider the rates of homicide, mva deaths and greater than twice the rates of obesity that the US has compared to europe, japan and canada it’s a miracle and tribute to the system that we’re the same. If you want to compare systems look at how long it takes you to get imaging studies(mri’s, cat scans), waiting times for orthopedic procedures, survival post transplants/bypass surgery, etc. the US is clearly superior in these areas. Since we will never have meaningful tort reform in this country, unlike europe and canada, the cost of “free” health care would be through the roof. just look at what happened in Hawaii this last yr, when all they did was expand schip.

DL; I for one would not bare my a$$ for an extra tetanus shoot just because it is free :-)

Pkut; in what way is “our current system superior to any socialized system”? Is it all the people in our country that goes bankrupt because of health care costs. All the mentally ill who cannot figure out how to navigate the system and fill out forms, and end up on the street without help? Or is it all the low income people that end up having to choose between medicine or food, and end up in the emergency room because of it? Or is it the 20% of all health care cost that we use to hire insurance companies and doctor’s office administrators to fight each other to avoid covering the cost for proper care for patients?

The fact is that France pays a lot less for a health care system that by any reasonable performance measure is doing a lot better than ours. Although if you want to do facts Cato-style you can find a few little procedures (out of hundreds) where we barely manage to be better than the frogs. The same goes for waiting times for certain non-essential procedures (particularly those that produce fat profits for the provider). You may be able to find (Cato-style) a few select European countries that are worse than us on that.

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About Barry Ritholtz

Ritholtz has been observing capital markets with a critical eye for 20 years. With a background in math & sciences and a law school degree, he is not your typical Wall St. persona. He left Law for Finance, working as a trader, researcher and strategist before graduating to asset managementRead More...

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